WYNYARD, UK, Nov. 5, 2020 /PRNewswire/ --
Third Quarter 2020 Highlights
- Net loss attributable to Venator of $42
million compared to net loss attributable to Venator of
$19 million in the prior year
period
- Adjusted EBITDA of $17 million
compared to $50 million in the third
quarter of 2019
- Net cash provided by operating activities of $20 million and free cash flow of $24 million
- Diluted loss per share of $0.39
and adjusted diluted loss per share of $0.17
- TiO2 sales volumes increased by 2% compared to the
second quarter of 2020, indicating a gradual recovery
- Announces new $55 million 2020
Business Improvement Program
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
June 30,
2020
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
Revenues
|
|
$
|
474
|
|
|
$
|
526
|
|
|
$
|
456
|
|
|
$
|
1,462
|
|
|
$
|
1,666
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to Venator
|
|
$
|
(42)
|
|
|
$
|
(19)
|
|
|
$
|
(19)
|
|
|
$
|
(54)
|
|
|
$
|
(1)
|
|
Adjusted net (loss)
income attributable to Venator(1)
|
|
$
|
(18)
|
|
|
$
|
8
|
|
|
$
|
(3)
|
|
|
$
|
(9)
|
|
|
$
|
36
|
|
Adjusted
EBITDA(1)
|
|
$
|
17
|
|
|
$
|
50
|
|
|
$
|
37
|
|
|
$
|
111
|
|
|
$
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share
|
|
$
|
(0.39)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.51)
|
|
|
$
|
(0.01)
|
|
Adjusted diluted
(loss) earnings per share(1)
|
|
$
|
(0.17)
|
|
|
$
|
0.08
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.08)
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
20
|
|
|
$
|
14
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
(36)
|
|
Free cash
flow(3)
|
|
$
|
24
|
|
|
$
|
(5)
|
|
|
$
|
18
|
|
|
$
|
(43)
|
|
|
$
|
(137)
|
|
|
See end of press
release for footnote explanations
|
Venator Materials PLC ("Venator") (NYSE: VNTR) today reported
third quarter 2020 results with revenues of $474 million, net loss attributable to Venator of
$42 million, adjusted net loss
attributable to Venator of $18
million and adjusted EBITDA of $17
million.
Simon Turner, President and
CEO of Venator, commented:
"During the third quarter we carefully aligned our production
network with market demand. Higher production costs from lower
facility utilization were successfully offset by a reduction in
inventories and we delivered $24
million of free cash flow.
"I am pleased by the gradual recovery in demand for most of our
products. We saw broad improvement in sales volumes resulting in an
increase of 3% compared to the second quarter, notwithstanding a
seasonally weaker third quarter and the impact of Hurricane Laura
on our TiO2 joint venture facility in Louisiana. Notably, our color pigments and
timber treatment businesses continue to demonstrate resilience
during the current challenging macro-economic environment.
"We continue to optimize our controllable cost structure and by
year end will have completed the actions necessary to deliver the
full benefits of our 2019 Business Improvement Program. In
addition, we implemented non-recurring COVID-19 related cost saving
initiatives of approximately $30
million in 2020. We have also identified cost saving and
operational improvements from which we expect to deliver annual
savings greater than $55 million in
2022 compared to 2019.
"I want to acknowledge the tremendous efforts of our associates
over these past several months. Combined with future costs savings
and the ongoing recovery in demand for our products, I am
encouraged about the trajectory of our business."
Segment Analysis for 3Q20 Compared to 3Q19
Titanium Dioxide
The Titanium Dioxide segment
generated revenues of $343 million
for the three months ended September 30,
2020, a decrease of $53
million, or 13%, compared to the same period in 2019. The
decrease was primarily due to an 11% decline in TiO2
sales volumes, a 2% decrease in average local currency selling
prices and a 2% unfavorable impact due to Mix and Other, partially
offset by a 2% favorable impact from foreign currency translation.
TiO2 sales volumes declined across all product
categories and regions, most notably in Europe, primarily due to lower demand as a
result of the impact of COVID-19 and in North America due to the impact of Hurricane
Laura.
Adjusted EBITDA for the Titanium Dioxide segment was
$21 million for the three months
ended September 30, 2020, a decrease
of $30 million compared to the same
period in 2019. The decrease was primarily attributable to lower
revenue and lower plant utilization resulting in higher production
costs. The comparison was also impacted by a benefit in the third
quarter of 2019 due to a change in plant utilization rates. These
unfavorable impacts on our adjusted EBITDA were partially offset by
benefits from our Business Improvement Programs and non-recurring
benefits from our COVID-19 response program.
Performance Additives
The Performance Additives
segment generated revenues of $131
million for the three months ended September 30, 2020, an increase of $1 million, or 1%, compared to the same period in
2019. The increase was primarily attributable to a 2% increase in
the average local currency selling price, a 2% favorable impact of
Mix and Other and a 1% favorable impact of foreign currency
translation, partially offset by a 4% decrease in sales volumes.
The decline in sales volumes was primarily a result of lower demand
in our functional additives businesses due to the impact of the
COVID-19 pandemic. The average selling price increased primarily as
a result of favorable mix within our color pigments and timber
treatment businesses while the favorable impact of Mix and Other
reflects higher sales of timber treatment products.
Adjusted EBITDA for the Performance Additives segment was
$5 million for the three months ended
September 30, 2020, a decrease of
$8 million compared to the same
period in 2019. The decrease was primarily attributable to lower
plant utilization resulting in higher production costs. The
comparison was also impacted by a benefit in the third quarter of
2019 due to a change in plant utilization rates, and a
non-recurring benefit included in operating income in 2019 related
to finalization of asset retirement obligations, partially offset
by benefits from our Business Improvement Programs and
non-recurring benefits from our COVID-19 response program.
Corporate and other
Corporate and other represents
expenses which are not allocated to our segments. Losses from
Corporate and other were $9 million
in the three months ended September 30,
2020, or $5 million lower
compared to the same period in 2019. This was primarily cost
savings from actions taken in response to the COVID-19 pandemic and
a favorable variance in foreign exchange rates compared to the
prior year.
Business Improvement Programs
We have announced a 2020
Business Improvement Program that will save approximately
$55 million annually compared to
2019. This includes approximately $10
million of savings from color pigments and approximately
$45 million of other expected
savings. We expect to incur future cash restructuring costs of
$45-50 million to deliver the 2020
Business Improvement Program. The annual $55
million EBITDA improvement is in addition to our 2019
Business Improvement Program and replaces our non-recurring
COVID-19 cost saving initiatives delivered in 2020.
Tax Items
We recorded income tax expense of
$3 million and $8 million for the three months ended September
30, 2020 and 2019, respectively. Our adjusted effective tax
rate was 35% for both the three months ended September
30, 2020 and the same period in 2019.
Our income taxes are significantly affected by the mix of income
and losses in the tax jurisdictions in which we operate, as
impacted by the presence of valuation allowances in certain tax
jurisdictions. In 2020, we expect an adjusted effective tax rate of
approximately 35%. We expect cash taxes in 2020 to be less than
$5 million and we continue to expect
our adjusted effective tax rate in the long-term will be
approximately 15% to 20%.
Liquidity and Capital Resources
As of September
30, 2020, we had $472 million of total liquidity. This
includes cash and cash equivalents of $208
million and $264 million of availability under our
existing asset-based revolving credit facility. At the end of the
third quarter, net debt was $749
million compared to $695
million as of December 31,
2019.
Year to date, capital expenditures have totaled $54 million, including $7
million in the third quarter of 2020. In 2020, we expect
total capital expenditures to be approximately $65 million.
Earnings Conference Call Information
We will hold a
conference call to discuss our third quarter 2020 results on
Thursday, November 5, 2020 at 8:00 a.m. ET.
|
|
|
Call-in numbers for
the conference call:
|
|
|
|
U.S.
participants
|
1-833-366-1118
|
|
|
|
International
participants
|
1-412-902-6770
|
|
|
|
(No passcode
required)
|
|
In order to facilitate the registration process, you may use the
following link to pre-register for the conference call. Callers who
pre-register will be given a unique PIN and separate call-in number
to gain immediate access to the call and bypass the live operator.
To pre-register, please go to:
https://dpregister.com/sreg/10147787/d88fd24fee
Webcast Information
The conference call will be
available via webcast and can be accessed from the company's
website at venatorcorp.com/investor-relations.
Replay Information
The conference call will be
available for replay beginning November 5,
2020 and ending November 12,
2020.
|
|
|
Call-in numbers for
the replay:
|
|
|
|
U.S.
participants
|
1-877-344-7529
|
|
|
|
International
participants
|
1-412-317-0088
|
|
|
|
Passcode
|
10147787
|
Upcoming Conferences
During the fourth quarter of
2020, a member of management is expected to present at the BofA
Securities Virtual 2020 Leveraged Finance Conference November 30 – December 2,
2020 and Citi's 2020 Basic Materials Conference December 1-2, 2020. A webcast of the
presentations, if applicable, along with accompanying materials
will be available at venatorcorp.com/investor-relations.
Table 1 — Results
of Operations
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
|
$
|
474
|
|
|
$
|
526
|
|
|
$
|
1,462
|
|
|
$
|
1,666
|
|
Cost of goods
sold
|
|
454
|
|
|
464
|
|
|
1,336
|
|
|
1,461
|
|
Operating
expenses
|
|
33
|
|
|
50
|
|
|
121
|
|
|
150
|
|
Restructuring,
impairment and plant closing and transition costs
|
|
13
|
|
|
12
|
|
|
25
|
|
|
24
|
|
Operating (loss)
income
|
|
(26)
|
|
|
—
|
|
|
(20)
|
|
|
31
|
|
Interest expense,
net
|
|
(15)
|
|
|
(10)
|
|
|
(37)
|
|
|
(31)
|
|
Other
income
|
|
5
|
|
|
1
|
|
|
12
|
|
|
3
|
|
(Loss) income
before income taxes
|
|
(36)
|
|
|
(9)
|
|
|
(45)
|
|
|
3
|
|
Income tax
expense
|
|
(3)
|
|
|
(8)
|
|
|
(3)
|
|
|
—
|
|
Net (loss)
income
|
|
(39)
|
|
|
(17)
|
|
|
(48)
|
|
|
3
|
|
Net income
attributable to noncontrolling interests
|
|
(3)
|
|
|
(2)
|
|
|
(6)
|
|
|
(4)
|
|
Net loss
attributable to Venator
|
|
$
|
(42)
|
|
|
$
|
(19)
|
|
|
$
|
(54)
|
|
|
$
|
(1)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
|
17
|
|
|
$
|
50
|
|
|
$
|
111
|
|
|
$
|
171
|
|
Adjusted net
(loss) income(1)
|
|
$
|
(18)
|
|
|
$
|
8
|
|
|
$
|
(9)
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share
|
|
$
|
(0.39)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.51)
|
|
|
$
|
(0.01)
|
|
Diluted loss
earnings per share
|
|
$
|
(0.39)
|
|
|
$
|
(0.18)
|
|
|
$
|
(0.51)
|
|
|
$
|
(0.01)
|
|
Adjusted (loss)
earnings per share(1)
|
|
$
|
(0.17)
|
|
|
$
|
0.08
|
|
|
$
|
(0.08)
|
|
|
$
|
0.34
|
|
Adjusted diluted
(loss) earnings per share(1)
|
|
$
|
(0.17)
|
|
|
$
|
0.08
|
|
|
$
|
(0.08)
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
Ordinary share
information:
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
106.7
|
|
|
106.6
|
|
|
106.7
|
|
|
106.5
|
|
Diluted
shares
|
|
106.7
|
|
|
106.6
|
|
|
106.7
|
|
|
106.5
|
|
|
See end of press
release for footnote explanations
|
Table 2 — Results
of Operations by Segment
|
|
|
|
Three months
ended
|
|
|
|
Nine months
ended
|
|
|
|
|
September
30,
|
|
Favorable
/
|
|
September
30,
|
|
Favorable
/
|
(In millions)
|
|
2020
|
|
2019
|
|
(Unfavorable)
|
|
2020
|
|
2019
|
|
(Unfavorable)
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
343
|
|
|
$
|
396
|
|
|
(13)%
|
|
$
|
1,083
|
|
|
$
|
1,260
|
|
|
(14)%
|
Performance
Additives
|
|
131
|
|
|
130
|
|
|
1%
|
|
379
|
|
|
406
|
|
|
(7)%
|
Total
|
|
$
|
474
|
|
|
$
|
526
|
|
|
(10)%
|
|
$
|
1,462
|
|
|
$
|
1,666
|
|
|
(12)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Titanium
Dioxide
|
|
$
|
21
|
|
|
$
|
51
|
|
|
(59)%
|
|
$
|
102
|
|
|
$
|
167
|
|
|
(39)%
|
Performance
Additives
|
|
5
|
|
|
13
|
|
|
(62)%
|
|
40
|
|
|
44
|
|
|
(9)%
|
Corporate and
other
|
|
(9)
|
|
|
(14)
|
|
|
36%
|
|
(31)
|
|
|
(40)
|
|
|
23%
|
Total
|
|
$
|
17
|
|
|
$
|
50
|
|
|
(66)%
|
|
$
|
111
|
|
|
$
|
171
|
|
|
(35)%
|
|
See end of press
release for footnote explanations
|
Table 3 — Factors
Impacting Sales Revenue
|
|
|
Three months
ended
|
|
September 30, 2020
vs. 2019
|
|
Average Selling Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
&
Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(2)%
|
|
2%
|
|
(2)%
|
|
(11)%
|
|
(13)%
|
Performance
Additives
|
2%
|
|
1%
|
|
2%
|
|
(4)%
|
|
1%
|
Total
Company
|
(2)%
|
|
2%
|
|
(1)%
|
|
(9)%
|
|
(10)%
|
|
|
|
Nine months
ended
|
|
September 30, 2020
vs. 2019
|
|
Average Selling
Price(a)
|
|
|
|
|
|
|
|
Local
Currency
|
|
Exchange
Rate
|
|
Sales Mix
&
Other
|
|
Sales
Volume(b)
|
|
Total
|
Titanium
Dioxide
|
(2)%
|
|
—%
|
|
(1)%
|
|
(11)%
|
|
(14)%
|
Performance
Additives
|
2%
|
|
(1)%
|
|
—%
|
|
(8)%
|
|
(7)%
|
Total
Company
|
(1)%
|
|
—%
|
|
(1)%
|
|
(10)%
|
|
(12)%
|
|
|
(a)
|
Excludes revenues
from tolling arrangements, by-products and raw materials
|
(b)
|
Excludes sales
volumes of by-products and raw materials
|
Table 4 —
Reconciliation of U.S. GAAP to Non-GAAP Measures
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per Share(1)
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
(In millions, except per share amounts)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net (loss)
income
|
|
$
|
(39)
|
|
|
$
|
(17)
|
|
|
$
|
(39)
|
|
|
$
|
(17)
|
|
|
$
|
(0.36)
|
|
|
$
|
(0.16)
|
|
Net income
attributable to noncontrolling interests
|
|
(3)
|
|
|
(2)
|
|
|
(3)
|
|
|
(2)
|
|
|
(0.03)
|
|
|
(0.02)
|
|
Net (loss) income
attributable to Venator
|
|
(42)
|
|
|
(19)
|
|
|
(42)
|
|
|
(19)
|
|
|
(0.39)
|
|
|
(0.18)
|
|
Interest expense,
net
|
|
15
|
|
|
10
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
3
|
|
|
8
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
29
|
|
|
27
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration adjustments
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
0.02
|
|
(Gain) loss on
disposal of businesses/assets
|
|
(6)
|
|
|
1
|
|
|
(6)
|
|
|
1
|
|
|
(0.06)
|
|
|
0.01
|
|
Certain legal
expenses/settlements
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
0.02
|
|
Amortization of
pension and postretirement actuarial losses
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
0.03
|
|
|
0.03
|
|
Net plant incident
costs
|
|
2
|
|
|
4
|
|
|
2
|
|
|
4
|
|
|
0.02
|
|
|
0.04
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
13
|
|
|
12
|
|
|
13
|
|
|
12
|
|
|
0.12
|
|
|
0.11
|
|
Income tax
adjustments(2)
|
|
—
|
|
|
—
|
|
|
12
|
|
|
3
|
|
|
0.11
|
|
|
0.03
|
|
Adjusted(1)
|
|
$
|
17
|
|
|
$
|
50
|
|
|
$
|
(18)
|
|
|
$
|
8
|
|
|
$
|
(0.17)
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
$
|
(9)
|
|
|
$
|
5
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
3
|
|
|
2
|
|
|
|
|
|
Adjusted pre-tax
(loss) income
|
|
|
|
|
|
$
|
(24)
|
|
|
$
|
15
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35%
|
|
|
35%
|
|
|
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(1)
|
|
|
Three months
ended June 30,
|
|
Three months
ended June 30,
|
|
Three months
ended June 30,
|
(In millions, except per share amounts)
|
|
2020
|
|
2020
|
|
2020
|
Net
loss
|
|
$
|
(17)
|
|
|
$
|
(17)
|
|
|
$
|
(0.16)
|
|
Net income
attributable to noncontrolling interests
|
|
(2)
|
|
|
(2)
|
|
|
(0.02)
|
|
Net loss
attributable to Venator
|
|
(19)
|
|
|
(19)
|
|
|
(0.18)
|
|
Interest expense,
net
|
|
12
|
|
|
|
|
|
Income tax
benefit
|
|
2
|
|
|
|
|
|
Depreciation and
amortization
|
|
28
|
|
|
|
|
|
Certain legal
expenses/settlements
|
|
3
|
|
|
3
|
|
|
0.03
|
|
Amortization of
pension and postretirement actuarial losses
|
|
4
|
|
|
4
|
|
|
0.04
|
|
Net plant incident
costs
|
|
2
|
|
|
2
|
|
|
0.02
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
5
|
|
|
5
|
|
|
0.05
|
|
Income tax
adjustments(2)
|
|
—
|
|
|
2
|
|
|
0.01
|
|
Adjusted(1)
|
|
$
|
37
|
|
|
$
|
(3)
|
|
|
$
|
(0.03)
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
$
|
—
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
2
|
|
|
|
Adjusted pre-tax
loss
|
|
|
|
$
|
(1)
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
35
|
%
|
|
|
|
|
EBITDA
|
|
Net Income
(Loss)
|
|
Diluted
Earnings
(Loss) Per
Share(1)
|
|
|
Nine months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
(In millions,
except per share amounts)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net (loss)
income
|
|
$
|
(48)
|
|
|
$
|
3
|
|
|
$
|
(48)
|
|
|
$
|
3
|
|
|
$
|
(0.45)
|
|
|
$
|
0.03
|
|
Net income
attributable to noncontrolling interests
|
|
(6)
|
|
|
(4)
|
|
|
(6)
|
|
|
(4)
|
|
|
(0.06)
|
|
|
(0.04)
|
|
Net loss
attributable to Venator
|
|
(54)
|
|
|
(1)
|
|
|
(54)
|
|
|
(1)
|
|
|
(0.51)
|
|
|
(0.01)
|
|
Interest expense,
net
|
|
37
|
|
|
31
|
|
|
|
|
|
|
|
|
|
Income tax
benefit
|
|
3
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
85
|
|
|
82
|
|
|
|
|
|
|
|
|
|
Business acquisition
and integration expenses
|
|
1
|
|
|
3
|
|
|
1
|
|
|
3
|
|
|
0.01
|
|
|
0.03
|
|
(Gain) loss on
disposal of businesses/assets
|
|
(4)
|
|
|
1
|
|
|
(4)
|
|
|
1
|
|
|
(0.04)
|
|
|
0.01
|
|
Certain legal
expenses/settlements
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
0.03
|
|
|
0.03
|
|
Amortization of
pension and postretirement actuarial losses
|
|
10
|
|
|
11
|
|
|
10
|
|
|
11
|
|
|
0.09
|
|
|
0.10
|
|
Net plant incident
costs
|
|
5
|
|
|
17
|
|
|
5
|
|
|
17
|
|
|
0.05
|
|
|
0.16
|
|
Restructuring,
impairment, plant closing and transition costs
|
|
25
|
|
|
24
|
|
|
25
|
|
|
24
|
|
|
0.24
|
|
|
0.23
|
|
Income tax impact of
adjustments(2)
|
|
—
|
|
|
—
|
|
|
5
|
|
|
(22)
|
|
|
0.05
|
|
|
(0.21)
|
|
Adjusted(1)
|
|
$
|
111
|
|
|
$
|
171
|
|
|
$
|
(9)
|
|
|
$
|
36
|
|
|
$
|
(0.08)
|
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(2)
|
|
|
|
|
|
$
|
(2)
|
|
|
$
|
22
|
|
|
|
|
|
Net income
attributable to noncontrolling interest, net of tax
|
|
|
|
|
|
6
|
|
|
4
|
|
|
|
|
|
Adjusted pre-tax
(loss) income
|
|
|
|
|
|
$
|
(5)
|
|
|
$
|
62
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
35
|
%
|
|
35
|
%
|
|
|
|
|
|
See end of press
release for footnote explanations
|
Table 5 — Selected
Balance Sheet Items
|
|
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2020
|
|
2019
|
Cash and cash
equivalents
|
|
$
|
208
|
|
|
$
|
55
|
|
Accounts and notes
receivable, net
|
|
306
|
|
|
321
|
|
Inventories
|
|
438
|
|
|
513
|
|
Prepaid expenses and
other current assets
|
|
77
|
|
|
88
|
|
Property, plant and
equipment, net
|
|
940
|
|
|
989
|
|
Other
assets
|
|
331
|
|
|
299
|
|
Total
assets
|
|
$
|
2,300
|
|
|
$
|
2,265
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
215
|
|
|
$
|
351
|
|
Other current
liabilities
|
|
107
|
|
|
124
|
|
Current portion of
debt
|
|
7
|
|
|
13
|
|
Long-term
debt
|
|
950
|
|
|
737
|
|
Non-current payable
to affiliates
|
|
30
|
|
|
30
|
|
Other non-current
liabilities
|
|
328
|
|
|
337
|
|
Total
equity
|
|
663
|
|
|
673
|
|
Total liabilities
and equity
|
|
$
|
2,300
|
|
|
$
|
2,265
|
|
Table 6 —
Outstanding Debt
|
|
|
|
September
30,
|
|
December
31,
|
(In millions)
|
|
2020
|
|
2019
|
Debt:
|
|
|
|
|
Term Loan
Facility
|
|
$
|
359
|
|
|
$
|
361
|
|
Senior Secured
Notes
|
|
215
|
|
|
—
|
|
Senior Unsecured
Notes
|
|
371
|
|
|
371
|
|
Other debt
|
|
12
|
|
|
18
|
|
Total debt -
excluding affiliates
|
|
957
|
|
|
750
|
|
Total cash
|
|
208
|
|
|
55
|
|
Net debt -
excluding affiliates
|
|
$
|
749
|
|
|
$
|
695
|
|
Table 7 —
Summarized Statement of Cash Flows
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
(In millions)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Total cash at
beginning of period
|
|
$
|
188
|
|
|
$
|
50
|
|
|
$
|
55
|
|
|
$
|
165
|
|
Net cash provided by
(used in) operating activities
|
|
20
|
|
|
14
|
|
|
—
|
|
|
(36)
|
|
Net cash provided by
(used in) investing activities
|
|
4
|
|
|
(19)
|
|
|
(43)
|
|
|
(101)
|
|
Net cash (used in)
provided by financing activities
|
|
(5)
|
|
|
(4)
|
|
|
195
|
|
|
13
|
|
Effect of exchange
rate changes on cash
|
|
1
|
|
|
(1)
|
|
|
1
|
|
|
(1)
|
|
Total cash at end
of period
|
|
$
|
208
|
|
|
$
|
40
|
|
|
$
|
208
|
|
|
$
|
40
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
(17)
|
|
|
$
|
(18)
|
|
|
$
|
(35)
|
|
|
$
|
(41)
|
|
Cash paid for income
taxes
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(4)
|
|
Capital
expenditures
|
|
(7)
|
|
|
(27)
|
|
|
(54)
|
|
|
(110)
|
|
Depreciation and
amortization
|
|
29
|
|
|
27
|
|
|
85
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
33
|
|
|
49
|
|
|
20
|
|
|
(28)
|
|
Inventories
|
|
65
|
|
|
(3)
|
|
|
87
|
|
|
27
|
|
Accounts
payable
|
|
(46)
|
|
|
(28)
|
|
|
(113)
|
|
|
(72)
|
|
Total
cash provided by (used in) primary working capital
|
|
$
|
52
|
|
|
$
|
18
|
|
|
$
|
(6)
|
|
|
$
|
(73)
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
(In
millions)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Free cash
flow(3):
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
|
$
|
20
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
(36)
|
|
Capital
expenditures
|
|
(7)
|
|
|
(27)
|
|
|
(54)
|
|
|
(110)
|
|
Other investing
activities
|
|
11
|
|
|
8
|
|
|
11
|
|
|
9
|
|
Total
free cash flow(3)
|
|
$
|
24
|
|
|
$
|
(5)
|
|
|
$
|
(43)
|
|
|
$
|
(137)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
|
17
|
|
|
$
|
50
|
|
|
$
|
111
|
|
|
$
|
171
|
|
Capital expenditures
excluding cash paid for Pori rebuild
|
|
(8)
|
|
|
(25)
|
|
|
(54)
|
|
|
(73)
|
|
Cash paid for
interest excluding hedging activity
|
|
(17)
|
|
|
(18)
|
|
|
(35)
|
|
|
(41)
|
|
Cash paid for income
taxes
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(4)
|
|
Primary working
capital change
|
|
52
|
|
|
18
|
|
|
(6)
|
|
|
(73)
|
|
Restructuring
|
|
(2)
|
|
|
(5)
|
|
|
(7)
|
|
|
(22)
|
|
Pension &
other
|
|
(21)
|
|
|
(22)
|
|
|
(49)
|
|
|
(40)
|
|
Net cash flows
associated with Pori
|
|
3
|
|
|
(2)
|
|
|
(3)
|
|
|
(55)
|
|
Total
free cash flow(3)
|
|
$
|
24
|
|
|
$
|
(5)
|
|
|
$
|
(43)
|
|
|
$
|
(137)
|
|
|
See end of press
release for numbered footnote explanations
|
Footnotes
|
(1)
|
Our management uses
adjusted EBITDA to assess financial performance. Adjusted EBITDA is
defined as net income/loss before interest income/expense, net,
income tax expense/benefit, depreciation and amortization, and net
income attributable to noncontrolling interests, as well as
eliminating the following adjustments: (a) business acquisition and
integration expenses/adjustments; (b) loss/gain on disposition of
business/assets; (c) certain legal expenses/settlements; (d)
amortization of pension and postretirement actuarial losses/gains;
(e) net plant incident costs/credits; and (f) restructuring,
impairment, and plant closing and transition costs/credits. We
believe that net income is the performance measure calculated and
presented in accordance with U.S. GAAP that is most directly
comparable to adjusted EBITDA.
|
|
|
|
We believe adjusted
EBITDA is useful to investors in assessing our ongoing financial
performance and provides improved comparability between periods
through the exclusion of certain items that management believes are
not indicative of our operational profitability and that may
obscure underlying business results and trends. However, this
measure should not be considered in isolation or viewed as a
substitute for net income or other measures of performance
determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA
as used herein is not necessarily comparable to other similarly
titled measures of other companies due to potential inconsistencies
in the methods of calculation. Our management believes this measure
is useful to compare general operating performance from period to
period and to make certain related management decisions. Adjusted
EBITDA is also used by securities analysts, lenders and others in
their evaluation of different companies because it excludes certain
items that can vary widely across different industries or among
companies within the same industry. For example, interest expense
can be highly dependent on a company's capital structure, debt
levels and credit ratings. Therefore, the impact of interest
expense on earnings can vary significantly among companies. In
addition, the tax positions of companies can vary because of their
differing abilities to take advantage of tax benefits and because
of the tax policies of the various jurisdictions in which they
operate. As a result, effective tax rates and tax expense can vary
considerably among companies. Finally, companies employ productive
assets of different ages and utilize different methods of acquiring
and depreciating such assets. This can result in considerable
variability in the relative costs of productive assets and the
depreciation and amortization expense among companies.
|
|
|
|
Nevertheless, our
management recognizes that there are limitations associated with
the use of adjusted EBITDA in the evaluation of us as compared to
net income. Our management compensates for the limitations of using
adjusted EBITDA by using this measure to supplement U.S. GAAP
results to provide a more complete understanding of the factors and
trends affecting the business rather than U.S. GAAP results
alone.
|
|
|
|
In addition to the
limitations noted above, adjusted EBITDA excludes items that may be
recurring in nature and should not be disregarded in the evaluation
of performance. However, we believe it is useful to exclude such
items to provide a supplemental analysis of current results and
trends compared to other periods because certain excluded items can
vary significantly depending on specific underlying transactions or
events, and the variability of such items may not relate
specifically to ongoing operating results or trends and certain
excluded items, while potentially recurring in future periods, may
not be indicative of future results.
|
|
|
|
Adjusted net income
is computed by eliminating the after-tax amounts related to the
following from net income attributable to Venator Materials PLC
ordinary shareholders: (a) business acquisition and integration
expenses/adjustments; (b) loss/gain on disposition of
business/assets; (c) certain legal expenses/settlements; (d)
amortization of pension and postretirement actuarial losses/gains;
(e) net plant incident costs/credits; and (f) restructuring,
impairment, and plant closing and transition costs/credits. Basic
adjusted net earnings per share excludes dilution and is computed
by dividing adjusted net income by the weighted average number of
shares outstanding during the period. Adjusted diluted net earnings
per share reflects all potential dilutive ordinary shares
outstanding during the period increased by the number of additional
shares that would have been outstanding as dilutive
securities.
|
|
|
|
Adjusted net income
(loss) and adjusted net earnings (loss) per share amounts are
presented solely as supplemental information. These measures
exclude similar noncash items as Adjusted EBITDA in order to assist
our investors in comparing our performance from period to period
and as such, bear similar risks as Adjusted EBITDA as documented
above. For that reason, adjusted net income and the related per
share amounts, should not be considered in isolation and should be
considered only to supplement analysis of U.S. GAAP
results.
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(2)
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Prior to the second
quarter of 2019, the income tax impacts, if any, of each adjusting
item represented a ratable allocation of the total difference
between the unadjusted tax expense and the total adjusted tax
expense, computed without consideration of any adjusting items
using a with and without approach.
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Beginning in the
three- and six-month periods ended June 30, 2019, income tax
expense is adjusted by the amount of additional tax expense or
benefit that we would accrue if we used non-GAAP results instead of
GAAP results in the calculation of our tax liability, taking into
consideration our tax structure. We use a normalized effective tax
rate of 35%, which reflects the weighted average tax rate
applicable under the various jurisdictions in which we operate.
This non-GAAP tax rate eliminates the effects of non-recurring and
period specific items which are often attributable to restructuring
and acquisition decisions and can vary in size and frequency. This
rate is subject to change over time for various reasons, including
changes in the geographic business mix, valuation allowances, and
changes in statutory tax rates.
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We eliminate the
effect of significant changes to income tax valuation allowances
from our presentation of adjusted net income to allow investors to
better compare our ongoing financial performance from period to
period. We do not adjust for insignificant changes in tax valuation
allowances because we do not believe it provides more meaningful
information than is provided under GAAP. We believe that our
revised approach enables a clearer understanding of the long term
impact of our tax structure on post tax earnings.
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(3)
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Management internally
uses a free cash flow measure: (a) to evaluate the Company's
liquidity, (b) to evaluate strategic investments and
(c) to evaluate the Company's ability to incur and service
debt. Free cash flow is not a defined term under U.S. GAAP, and it
should not be inferred that the entire free cash flow amount is
available for discretionary expenditures. The Company defines free
cash flow as cash flows provided by (used in) operating activities
from continuing operations and used in investing activities. Free
cash flow is typically derived directly from the Company's
condensed consolidated statement of cash flows; however, it may be
adjusted for items that affect comparability between periods. Free
cash flow is presented as supplemental information.
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About Venator
Venator is a global manufacturer and
marketer of chemical products that comprise a broad range of
pigments and additives that bring color and vibrancy to buildings,
protect and extend product life, and reduce energy consumption. We
market our products globally to a diversified group of industrial
customers through two segments: Titanium Dioxide, which consists of
our TiO2 business, and Performance Additives, which
consists of our functional additives, color pigments, timber
treatment and water treatment businesses. Based in Wynyard, U.K., Venator employs approximately
4,000 associates and sells its products in more than 110
countries.
Social Media:
Twitter: www.twitter.com/VenatorCorp
Facebook: www.facebook.com/venatorcorp
LinkedIn: www.linkedin.com/company/venator-corp
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements contained in this press
release constitute "forward looking statements" within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995. These
forward looking statements represent Venator's expectations or
beliefs concerning future events, and it is possible that the
expected results described in this press release will not be
achieved. These forward looking statements are subject to risks,
uncertainties and other factors, many of which are outside of
Venator's control, that could cause actual results to differ
materially from the results discussed in the forward looking
statements, including the impacts and duration of the global
outbreak of the Coronavirus Disease 2019 pandemic on the global
economy and all aspects of our business, including our employees,
customers, suppliers, partners, results of operations, financial
condition and liquidity, the pending acquisition by funds advised
by SK Capital Partners, L.P. of the ordinary shares of the Company
held by Huntsman Corporation, global economic conditions, our
ability to maintain sufficient working capital, our ability to
access capital markets on favorable terms, our ability to transfer
technology and manufacturing capacity from our Pori, Finland manufacturing facility to other sites
in our manufacturing network, the costs associated with such
transfer and the closure of our Pori facility, our ability to
realize financial and operational benefits from our business
improvement plans and initiatives, impacts on
TiO2 markets and the broader global economy from
the imposition of tariffs by the U.S. and other countries, changes
in raw material and energy prices, or interruptions in raw
materials and energy, industry production capacity and operating
rates, the supply demand balance for our products and that of
competing products, pricing pressures, technological developments,
legal claims by or against us, changes in government regulations,
including increased manufacturing, labeling and waste disposal
regulations and the classification of TiO2 as a
carcinogen in the EU, geopolitical events, cyberattacks and public
health crises such as coronavirus.
Any forward looking statement speaks only as of the date on
which it is made, and, except as required by law, Venator does not
undertake any obligation to update or revise any forward looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for Venator to predict all such factors. When considering
these forward looking statements, you should keep in mind the risk
factors and other cautionary statements in Venator's Annual Report
on Form 10-K for the year ended December 31,
2019 filed with the SEC and in its Quarterly Reports on Form
10-Q and Current Reports on Form 8-K. The risk factors and other
factors noted therein could cause its actual results to differ
materially from those contained in any forward looking
statement.
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SOURCE Venator Materials PLC